Cit v DLF case

1.Assessee is earning income taxable under the head Profit and gains of business or
profession.

2.Assessee incurred loss in share derivative transactions, being transaction of

nature specified in Proviso (d) to section 43(5). As per said proviso, losses from such
transactions are not loss from speculative transaction.

3.Can assessee set off his loss from share derivative transaction with other business
income?

In recent case in CIT v DLF Commercial Developers Ltd (ITA 94/2013),Honble Delhi
High Court denied such set off in view of provisions of explanation to section 73.
Section 73 contains the provisions for set-off loss from speculative business and
carry-forward of the same

As per said ruling, share derivative transactions carry the character of speculative
transactions for section 73 and any loss arising therefromwill be characterised as
loss from speculative business and samecannot be set-off against normal business
income

As per court section 43(5) defining speculative transaction is only for the purpose
defining terms used in section 28 to 41.Section 43(5) has no application over
section 73

Rajshree sugar mills case.

Madras high court on Tuesday ruled in favour of Axis Bank Ltd in a dispute between
it and Coimbatore-based Rajshree Sugars and Chemicals Ltd (RSCL).

The high court has held that the derivative contract is not a wagering contract,
which means it is not illegal. It has also been held that amount due to the bank
(Rs46-50 crore) is a debt as defined under the Debt Recovery Tribunal Act and
hence the bank can approach the Debt Recovery Tribunal (DRT), said a person
familiar with the development, who did not want to be named.

Rajshree Pathy, chairman and managing director of RSCL, was in London and could
not be reached for comment. Calls to the firms Coimbatore office werent
answered.
An order has been passed and the stay has been vacated, said Parthasarthy
Mukherjee, president of treasury at Axis Bank, referring to the stay order that had
been obtained by the company to prevent the bank from approaching the tribunal.

RSCL is one of several firms that entered into contracts with banks in an effort to
protect themselves from fluctuations in the foreign exchange market. Many of these
firms found themselves at the wrong end of the deal after the dollar depreciated
sharply against the rupee and also against other currencies last year. These firms
have alleged that they were mis-sold the products by the banks involved.